Silly people. It’s on lefty blogs. What is the rule with leftyblogs? Always assume it’s a lie, or at least grossly omitted context, until you can prove otherwise. And you can almost never prove otherwise.

If you look into the details – and your liberal friends certainly hope you don’t, because none of them really have (because the whole meme is something they got from Media Matters, that has been passed down from the higher-ranking ranking blogs to the lower-ranking local blogs. It’s the way they roll), you’ll see “no”.

Here’s a year by year walk through the major tax legislation of the Reagan administration, and the cuts (black) or hikes (red) they made in terms of percent of gross revenue.

1981

1982

1983

1984

1985

1986

1987

1988

Economic Recovery Act of 1981

-1.21

-2.6

-3.58

-4.15

“Tax Equity and Fiscal Responsibility Act of 1982 “

0.53

1.07

1.08

1.23

Highway Revenue Act of 1982

0.05

0.11

0.1

0.09

Social Security Amendments of 1983

0.17

0.22

0.22

0.24

Interest and Dividends Tax Compliance Ac of 1983t

-0.07

-0.06

-0.05

-0.04

Deficit Reduction Act of 1984

0.24

0.37

0.47

0.49

Omnibus Budget Reconciliation Act of 1985

0.02

0.06

0.06

0.06

Tax Reform Act of 1986

0.41

0.02

-0.23

Omnibus Budget Reconciliation Act 1987

.19

.3

Annual Total Cut/Hike As Percentage of Revenues

-1.21

-2.02

-3.30

-2.57

1.88

1.14

0.76

.13

Total Tax Cuts

11.99

Total Tax Hikes

7.35

Net Hike/Cuts

-4.64

So the table shows us a couple of key facts:

Reagan’s Tax Cuts Were Greater Than The Hikes: Reagan’s total tax cuts outstripped his hikes by over 50%. But even more importantly…

When The Economy Needed Cuts, Reagan Cut Them: During Reagan’s first term, when the economy was reeling from the seventies, Reagan by an average of 2% of revenues per year. The result? The economy boomed. The cuts led directly to one of the greatest economic expansions in history.

Now, if you’ve been listening to your liberal friends, you are intellectually poorer you might say “But in his second term, he turned into a tax-hiking machine, didn’t he?”

Focus, people. This is leftybloggers we’re talking about. Because even if they’re not outright lying (the numbers are right there, so they’re not), they’re leaving out key context.

And so too with this issue. Because…

The Tax Hikes In The Second Term Were A Result Of Democrat Perfidy: Remember – Reagan always faced Democrat legislative majorities. And eventually Reagan had to deal. Part of the deal was that in exchange for some tax hikes, the O’Neill Congress would cut spending.

So when your liberal friends stand by the water cooler and chant with their glassy eyes and Jon Stewart smirks “Reagan raised taxes”, you can respond “it’s true. Reagan raised taxes – after cutting them much more, and only as part of a deal on which the Democrats cheated”.

19 thoughts on “Chanting Points Memo: “Reagan Raised Taxes!””

Jon Stewart is….a standup comic. Reagan was an actor. Yes, before he became Governor of California. I looked hard at Stewart’s CV and couldn’t see much to compare with RR. I can use Stewart and Reagan in the same sentence: Jon Stewart isn’t capable of washing Ronald Reagan’s jockstrap.

Well put, though I’d note that we really ought to discuss tax rates instead of tax revenue here, as all too often, you can reduce tax rates to collect more revenue. I also ought to mention that conservatives are also known to bring out the long knives when a candidate has a mixed record–one can reduce the overall tax rates by 10% and the overall tax revenue by 7%, but if you raise the state excise tax in squid entrails by 0.1%, you will never hear the end of it.

May I suggest it’s time for conservatives to follow a more nuanced approach to taxation–one that acknowledges that tax compliance costs $300 billion annually, and one that acknowledges that tax evasion (a la Tim Geithner) costs a similar amount? It’s a sobering thought that we could reduce the overall cost to the law-abiding by $600 billion simply by reducing the complexity of the tax code and going after the tax cheats like those in the Obama administration. $2000/person, $5000/household. We are not talking about chicken feed here.

You’re right, Reagan did raise taxes. Bush Elder did, too. Both were trusting souls from a former generation who believed Democrat promises of future tax cuts would be honored in fact, not merely in the breach.

Which is why the current leadership isn’t falling for it, at either the federal or the state level. Fool me once . . . .

Tell you what, Democrats, let’s compromise: you agree to spending cuts now and later, if we have too much revenue from existing tax rates, we’ll talk about increasing spending. Tax cuts today, spending increases in out years, the mirror image of the deal offered Reagan. Seems fair. After all, it IS your turn.

Folks,
I gotta guy telling me that this chart of Mitch’s “contradicts one of the base tenets of supply-side economics, i.e. the Laffer Curve”.

The two of us are discussing a number of things so his claim might simply be him speaking Greek while I’m speaking Latin. I’ve said that had the Reagan Administration raised taxes higher (or cut taxes less, or both) in a given year the tax revenues collected would likely have been lower.

They didn’t decrease, per se, when the hikes happened in the second term; the economy was doing well enough that the tax hike didn’t do THAT much damage, although the Dems’ untrammeled social spending did…

Small businesses that do businesses locally and hire locally are the model the anti-tax hawks use as an example, of course, but if a wealthy investor invests the million bucks he saves on taxes in a Chinese manufacturing company, how does this drive US productivity and revenue up? How many US jobs are created?
Similarly, if a construction company saves a million bucks on its taxes and uses the money to field a construction team made up of illegal aliens, how does this benefit American workers?

Terry, there are many ways to correct for that if we were to have a serious industrial policy, which we don’t. We’ve been losing to more controlled economies in Asia for 30 years and we’ve reacted poorly, choosing to import low inflation and export jobs.

To combat that, suppose we were rational in national industrial policy. For example, suppose we keep the R&D tax credit for companies but only for R&D done in the US by Americans. We agree to cut the taxes associated with creating good paying, desirable jobs.

It’s a sensible solution since R&D is being subsidized locally the benefit should be local. Since profits made overseas aren’t taxed until they come back it doesn’t make sense to extend a credit for an activity that may never benefit the Americans paying for it.

As to the construction company, you have to have a government willing to enforce its own laws. Unfortunately you have the GOP establishment in the thrall of Big Business who want cheap labor. But by far the more unholy alliance is that of the Democraps who pander to racial issues hoping to win more votes while they hurt the poorest quintile of Americans who have seen their incomes drop in the last 20+ years because of the competition from illegals.

I’d tend to disagree, Loren. Big Business is a big contributor to both parties, although they do tend to favor the obvious winner (note that McCain didn’t get as much as Obama because he was, frankly, the weaker candidate in a wave election). It’s the established GOP leadership, not the tea-party folks and volunteers, who are the ones who shill for big business.

And it’s the fact that it’s easier to increase profits by driving out competitors out a market using government regulations than by creating a better product now that makes cutting the size of government so important.

Look at what Obamacare will do to small businesses: when you hit that 50th employee you suddenly get hammered with a whole new set of regulations, paperwork, and taxes. At that level you’ll have many very small businesses start, but few of them grow beyond that. Heck 50 person startups are small in most tech businesses. So if you like a sclerotic, stagnant economy Obamacare is the prescription for you! And that’s not even considering what the financial impact on the country will be.